HYF Managed High Yield Plus Fund, Inc.

Managed High Yield Plus Fund Inc. (NYSE: HYF) (the “Fund”) is a closed-end management investment company seeking high income, and secondarily, capital appreciation, primarily through investments in lower- rated, income-producing debt and related equity securities.

Fund Commentary for the second quarter 2013 from UBS Global Asset Management (Americas) Inc. (“UBS Global AM”), the Fund’s investment manager

Market Review

After generating positive results in April, the global fixed income market sold off in May and June. Triggering this turnaround were indications from the Federal Reserve Board (the “Fed”) that it may begin to taper its asset purchase program sooner than previously anticipated. This caused US Treasury yields to move sharply higher across the curve. Also impacting the fixed income market were the ongoing concerns regarding the European sovereign debt crisis, moderating growth in China and several geopolitical issues. The US yield curve steepened, as short-term yields remained anchored while longer-term yields increased during the quarter. The overall US bond market, as measured by the Barclays US Aggregate Index, declined 2.32% during the quarter.

Against this backdrop, the US spread sectors (non-US Treasury fixed income securities) performed poorly during the second quarter. While high yield corporate bonds generated a negative absolute return, they modestly outperformed equal duration Treasuries during the quarter. The Bank of America Merrill Lynch US Cash Pay High Yield Constrained Index1 (the “Index”) returned -1.37% during the quarter. From a ratings perspective, higher-quality rated high yield debt broadly underperformed lower-quality bonds, with the BB- and B-rated segments lagging the CCC and below-rated segment.

Performance Review

For the second quarter of 2013, the Fund posted a net asset value total return of -2.48%, and a market price return of -5.41%. On a net asset value basis, the Fund underperformed the Index, its benchmark, which, as previously stated, returned -1.37% for the quarter.

Within spread management, sector allocation contributed positively to performance during the quarter, particularly our overweights to insurance, paper and air transportation. Security selection within the transportation ex-air and metal/mining sectors was also beneficial for performance. However, as the high yield market posted a negative return for the quarter, the portfolio’s use of leverage detracted from performance, relative to the Index. Lastly, security selection in the financial, chemical and paper sectors were negative for performance.

A number of changes were made to the portfolio during the quarter. We increased the Fund's allocations to the energy and super retail sectors, adding to our overweight positions. We also increased exposure to consumer cyclicals, reducing the extent of our underweight. Elsewhere, we reduced our exposures in the bank, services, metals/mining and homebuilder sectors. We also closed our out-of-benchmark allocation to commercial mortgage-backed securities (CMBS). The Fund’s duration2 at the end of the second quarter was 4.13 years.

We began the second quarter with our largest overweights to energy, services, and telecommunications, and underweights to steel, consumer products and diversified media. We ended the quarter with the largest overweights to the energy, telecommunications, services and cable television sectors. Our largest underweights at the end of June were to the metals/mining, restaurants and diversified media sectors.

Outlook

We currently view the market as characterized by uncertainty. High yield corporate bond markets are being driven by the dynamics of global government bond yields and the resulting change in their prices, as well as by investor sentiment. In general, if US government bond yields rise further, we expect to see continued pressure and volatility within risk markets, including high yield corporate bonds. Despite recent volatility, we maintain a broadly positive outlook on high yield as an asset class. We view the backdrop of modest economic growth, coupled with what remains of accommodative monetary policy and relatively sound corporate fundamentals, as favorable for corporate bond investors. In addition, the spread widening and Treasury yield increases witnessed in recent months could provide attractive entry points for investors at more compelling yield and spread levels. The risk to this view is that technical factors, potentially driven by further outflows from the asset class and a challenging environment for trading liquidity, could overwhelm in the near term and lead to further volatility, as well as weakness in high yield markets.

Disclaimers Regarding Fund Commentary - The Fund Commentary is intended to assist shareholders in understanding how the Fund performed during the period noted. The views and opinions were current as of the date of this press release. They are not guarantees of performance or investment results and should not be taken as investment advice. Investment decisions reflect a variety of factors, and the Fund and UBS Global AM reserve the right to change views about individual securities, sectors and markets at any time. As a result, the views expressed should not be relied upon as a forecast of the Fund’s future investment intent.

Past performance does not predict future performance. The return and value of an investment will fluctuate so that an investor's shares, when sold, may be worth more or less than their original cost. Any Fund net asset value ("NAV") returns cited in a Fund Commentary assume, for illustration only, that dividends and other distributions, if any, were reinvested at the NAV on the payable dates. Any Fund market price returns cited in a Fund Commentary assume that all dividends and other distributions, if any, were reinvested at prices obtained under the Fund's Dividend Reinvestment Plan. Returns for periods of less than one year have not been annualized. Returns do not reflect the deduction of taxes that a shareholder would pay on Fund dividends and other distributions, if any, or on the sale of Fund shares.

Further information regarding the Fund, including a discussion of principal objectives, principal investment strategies and principal risks, may be found in the fund overview located at http://www.ubs.com/closedendfundsinfo. You may also request copies of the fund overview by calling the Closed-End Funds Desk at 888-793 8637.

1 The BofA Merrill Lynch US High Yield Cash Pay Constrained Index is an unmanaged index of publicly placed nonconvertible, coupon-bearing US dollar-denominated below investment grade corporate debt with a term to maturity of at least one year. The index is market-capitalization weighted, so that larger bond issuers have a greater effect on the index’s return. However, the representation of any single bond issue is restricted to a maximum of 2% of the total index. The index is not leveraged. Investors should note that indices do not reflect the deduction of fees and expenses.

2 Duration measures a portfolio’s sensitivity to interest rate changes.

Managed High Yield Plus Fund, Inc. (NYSE:HYF)
Gráfica de Acción Histórica
De May 2024 a Jun 2024

Managed High Yield Plus Fund, Inc. (NYSE:HYF)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024